Portuguese lender Novo Banco almost triples nine-month net profit

Banco Espirito Santo SA em Liquidacao

07/11/2022 11:09

By Sergio Goncalves
       LISBON, Nov 7 (Reuters) - Portuguese lender Novo Banco's
nine-month net profit almost tripled from a year earlier, it
said on Monday, citing improved commission income, capital
market gains and a steep drop in impairments and provisions. 
    The bank, which emerged from the ruins of collapsed Banco
Espirito Santo in 2014, netted 428 million euros ($427  million)
in the nine month's to Sept. 30, up from 154 million euros a
year earlier.
    Novo Banco, 75% owned by U.S. private equity firm Lone Star
and 25% by Portugal's Resolution Fund, said its pretax return on
tangible equity (ROTE) rose to 12.4% in September from 11% in
June.
    It said in a statement the results showed sustainable growth
and "ability to generate revenue and capital despite the
uncertain macro (economic) background" and high inflation.
    Although nine-month net interest income (NII), or earnings
on loans minus funding costs, fell 5.6% due to the higher
funding cost of senior debt issuance and other factors, NII
increased by 2.5% between July and September from the previous
three months, benefiting from rate hikes by the European Central
Bank.
    After a major clean-up of its balance sheet, impairments and
provisions fell by 86% to 22.5 million euros, while
non-performing loans fell to 1.75 billion euros, or 5% of total
credit, in September from 2.2 billion a year ago
    Fees and commissions rose 3.8% to 215.7 million euros in the
nine months, while capital markets results increased 34.5% to
68.2 million euros.
    Novo Banco's fully loaded Common Equity Tier 1 solvency
ratio improved to 12.1% in September, 90 basis points higher
than in June.
    ($1 = 1.0016 euros)
 (Reporting by Sergio Goncalves  Editing by Andrei Khalip and
Mark Potter)
 ((sergio.goncalves@thomsonreuters.com; +351213509204; Reuters
Messaging: sergio.goncalves.reuters.com@reuters.net))